Important judgement on business method patent in the United States

On 20 June 2014, the U.S. Supreme Court handed down an important decision, Alice v. CLS Bank, clarifying the extent to which business methods can be patented. The earlier stages of the proceedings have been well covered in the media as this is one of relatively few times the Supreme Court has interpreted 35 U.S.C. § 101, with a potential to shape the future of computer-implemented inventions in general. Some of the claims at issue were actually not explicitly drawn to computer implementations or software, but the Court alleges it has considered the claims with an understanding that they “require generic computer implementation.”

One of Alice’s claims is found here, and the full judgement here. From the explosion of analyses by local practitioners, we were particularly impressed by 1, 2 and 3 and recommend them to you.

The judgement affirms the lower-instance judgment, which in turn is in keeping with current practice in the USPTO. In brief, the Court decided to revoke Alice’s patent because the method claims were allegedly directed to an “abstract idea” whose implementation was too generic to transform the idea into a patentable invention. The computer system and storage media claims were refused for the same reason; possibly the decision would have been different had the claims recited more implementation details. The language may be problematic to practitioners: just how abstract is an “abstract idea”? and is a programmable computer too “generic”? The challenging task of steering clear of “abstract ideas” and “generic implementation” is illustrated by the allowed and rejected claims from previous Supreme Court judgements: compare, in the same claim table, Flook and Diehr.

The present case highlights the limited usefulness of the concept “software patents.” While patents covering software typically cause little or no public debate when granted for inventions in conventional technology, software realizing business methods is more controversial. As shown by an overwhelming majority of the submitted amicus curiae briefs in Alice, the IT industry has a keen desire to dissociate itself from the “plague of abstract computer-related patents”, as the brief by Amazon, Google and others puts it. The brief cites Bill Gates in 1991 (in another court case), where he claims the software industry would have been at a “complete standstill” if the early inventors had applied for all the patents they could. The statement illustrates not only that the USPTO has become more stringent, but also reminds us of the much higher IP awareness in Mr Gates’ industry today, which has had to get used to – and benefit from – the existence of patents just like in other technical fields.

As European practitioners, we regularly ask American patent attorneys to prosecute our applications before the USPTO, making it essential for us to keep our drafting practices up-to-date, to be able to present the invention from the right angle and in all required detail. Unlike judgements like Bilski (2010), the Alice case represents no sudden change but will probably be received as a sign that the practice has stabilized. With its insistence on technical improvement, the Alice judgement in fact lands its conclusions rather close to the current European examination practice, despite its very different legal starting point.

The judgement should be reassuring also to Japanese applicants, whose applications are normally drafted to convince the JPO examiner that “information processing by software is concretely realized by using hardware resources” (JPO Guidelines, part VII), sometimes rephrased to mean that the implementation is “particularly suitable for a use purpose”. This intention should also limit abstraction and genericness.